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lawyer [7]
3 years ago
5

Suppose that when the price per ream of recycled printer paper rises from​ $4 to​ $4.50, the quantity demanded falls from 800 to

600 reams per day. Using the midpoint​ formula, what is the price elasticity of demand​ (in absolute​ value) over this​ range? A. 0.003 B. 0.41 C. 2.43 D. 4
Business
1 answer:
Delvig [45]3 years ago
5 0

Answer:

Option (c) is correct.

Explanation:

Initial quantity demanded = 800

New quantity demanded = 600

Initial price = $4

New price = $4.50

Using the midpoint​ formula,

For price:

Average price:

= (Initial price + New price) ÷ 2

= ($4 + $4.50) ÷ 2

= $4.25

Change in price = New price - Initial price

                           = $4.50 - $4

                           = $0.50

For Quantity demanded:

Average quantity demanded:

= (Initial Quantity demanded + New Quantity demanded) ÷ 2

= (800 + 600) ÷ 2

= 700

Change in quantity demanded:

= New Quantity demanded + Initial Quantity demanded

= 600 - 800

= -200

Price elasticity of demand:

=\frac{\frac{Change\ in\ quantity\ demanded}{Average\ quantity\ demanded} }{\frac{Change\ in\ price}{Average\ price}}

=\frac{\frac{(-200)}{700} }{\frac{0.50}{4.25}}

= (- 0.29) ÷ 0.12

= -2.43

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3 years ago
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What is the difference between an increase in demand and an increase in quantity demanded?.
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Answer:

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Explanation:

There will be an increase in Quantity Demanded when price goes down. There is a Quantity Demand change when there is a price change. (QD goes up when Price goes down, QD goes down when price goes up)

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2 years ago
The information content of a dividend increase generally signals that: A. the firm has a one-time surplus of cash.B. the firm ha
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The ____ section of the project scope document is where the contractor or project team can state and clarify exactly what is inc
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I hope this helps :)

6 0
3 years ago
A company is considering replacing an old piece of machinery, which cost $601,300 and has $350,900 of accumulated depreciation t
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Answer:

Question Aa. Alternative 1–$1,253,600

Alternative 2 –$1,230,300

Differential effect $ 23,300

b.The company should replace the old machine.

c Sunk cost $250,400

Question Ba. Alternative 1–$488,000

Alternative 2 –$466,000

Differential effect $ 22,000

b.The company should replace the old machine.

c Sunk cost $250,000

Explanation:

Question Aa. Preparation of a differential analysis dated September 13

DIFFERENTIAL ANALYSIS

Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)

September 13

Continue with Old Machine (Alternative 1); Replace Old Machine (Alternative 2) ; Differential

on Income (Alternative 2)

Revenues:

Proceeds from sale of old

machine $ 0 $64,500 $64,500

Costs:

Purchase price 0 –$483,600 –$483,600

Variable production costs (8 years)–$1,253,600 –$811,200 $442,400

($156,700*8=$1,253,600)

($101,400*8=$811,200)

Income (Loss) –$1,253,600 –$1,230,300 $ 23,300

b. The company should replace the old machine.

c. Calculation for The sunk cost

Using this for formula

Sunk cost= Book value- Accumulated

depreciation

Let plug in the formula

Sunk cost=$601,300-$350,900

Sunk cost=$250,400

Question Ba. Preparation of a differential analysis dated September 13

DIFFERENTIAL ANALYSIS

Continue with Old Machine (Alt. 1) or Replace Old Machine (Alt. 2)

September 13

Continue with Old Machine (Alternative 1); Replace Old Machine (Alternative 2) ; Differential

on Income (Alternative 2)

Revenues:

Proceeds from sale of old

machine $ 0 $231,000 $231,000

Costs:

Purchase price 0 –$545,000 –$545,000

Variable production costs (8 years)–$488,000 –$152,000 $336,000

($61,000*8=$488,000)

($19,000*8=$152,000)

Income (Loss) –$488,000 –$466,000 $ 22,000

b. The company should replace the old machine.

c. Calculation for The sunk cost

Using this for formula

Sunk cost= Book value- Accumulated

depreciation

Let plug in the formua

Sunk cost=$600,000-$350,000

Sunk cost=$250,000

6 0
2 years ago
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